Senator Saleem Mandviwalla, Chairman Senate Standing Committee on Finance and Revenue, participated in TRT World Forum held in Istanbul today.

Speaking at a panel titled, ‘Between Recession and Stagflation: The World Economy at the Crossroads, the Senator elaborated on the dynamics of the post-pandemic global economy. He stated that the pandemic created pressure on weak economies, widening economic and social gaps. However, digital globalization offers multifold and multidimensional digital solutions to boost the economy and other sectors.

The Senator highlighted that it would be impossible for many countries to avoid recession under the current risks of stagflation. Therefore, production must be encouraged, trade restrictions must be avoided, and debt relief efforts must be enhanced to prevent recession; with debt distress spreading to middle-income countries, the risks to the global economy will amplify.

Learning from past experiences, it is important to balance the need to ensure fiscal sustainability and mitigate the effects of the overlapping crisis. In an extraordinary era of overlapping global concerns, policymakers need to focus their efforts on countering inflation, boosting the supply of key food and energy commodities and clean energy to reduce dependency on fossil fuels, Senator Mandviwala added. The Senator reiterated that significant financial and investment commitments towards creating climate-smart regulatory frameworks, adjusting incentive structures, and strengthening land-use regulations are the need of the hour.

In a nutshell, the Senator emphasized combined global efforts to protect the most vulnerable economies from surging oil and food prices and considering mechanisms for debt relief, to avoid a repetition of the economic conditions of the 1970s; he added that against the challenging backdrop of higher inflation, weaker growth, tighter financial conditions, and limited fiscal policy space, governments need to prioritize spending toward targeted relief for vulnerable populations.